Minister Roberts says property sector must contribute to NSW’s growth

(The following is a copy of a speech given by the Minister at a HIA NBN NSW Planning luncheon on Tuesday 27 November.)

It’s ironic to gather so many of this State’s leading builders and planners in a public space that wouldn’t pass muster under today’s building and planning regulations.

Parliament House was a frontier surgeon’s quarters, which had two prefabricated halls shipped here from Scotland tacked on as parliamentary chambers.

When the time came to build the tower block we’re sitting in to house the principal organs of Government, it had to be redesigned because the Council wouldn’t let us build any higher.

This might actually be one of the last major functions the House hosts before we shut down for three months and complete the first major renovation of the place in 40 years.

This building is a good metaphor for our planning system.

An edifice steeped in tradition, adapted for a new use, with the component parts built on over time and as required.

You could never knock it down and rebuild it, you can only make it work better.

That’s been my focus in this portfolio for two years – making what we have work better and faster.

And importantly, making a planning system that the public can trust, with an emphasis on probity and transparency. (?)

I’m going to talk a lot today about public trust. Because so many of the issues that frustrate you, and the industry, and your stakeholders, come down to questions of trust.

But before I do, I want to thank you, each and every one of you, because the building and construction industry in this State is responsible in so many ways for the economic transformation we’ve experienced since 2011.

The achievements of my Government would not have been possible without your contribution.

Because you are building them.

The commitment and dedication of our residential building industry goes to the heart of our economic growth.

All over the State, armies of young workers arrive in cities and towns every morning to work on the many construction and infrastructure projects we are undertaking as a government in partnership with the private sector.

You can see them at Martin Place station in the morning at about 6am.

You can see them at Parramatta.

At Rhodes.

In the south west, in the north west.

Across our city, every morning, thousands upon thousands of mostly young people, men and increasingly women, which can I say is fantastic, arriving to work on projects that were simply inconceivable a decade ago.

The transformative impact of these jobs, these new jobs, simply cannot be understated.

The economic impact is utterly profound.

Every new pay cheque you’re cutting for a new worker on a new project is driving the success of our State to new heights.

We are topping every economic indicator in NSW. And we owe it all to you.

This decade, the industry has provided a generation of young Sydney siders opportunities in building and construction for the first time in a generation. This is driving our economy.

Notwithstanding, I know there is growing anxiety about forward supply policies and population. I know if Labor gets in with their restrictive development policies times will get tough for everyone – builders, workers and importantly home owners.

We owe it to those kids getting off trains every morning before the sun rises to get growth right.

I’m going to tell some home truths today, and talk frankly about some of the concerns you have about my Government’s policies particularly around infrastructure contributions.

But I want to make it absolutely clear what my agenda is from the outset. It’s those kids getting off the train to work in the morning.

Those who have a once in a life time transformative opportunity to work, generate wealth for themselves and their families.

We are committed. I am committed to growing their opportunity to work, to buy homes for themselves, to invest and to start families.

This time last year, I would have been standing here talking about the public debate around housing affordability, and how we simply weren’t building enough houses to keep pace with growth.

Today, we’re having a public debate about population growth, and how we are bringing more people here than our housing and infrastructure can keep pace with.

Fundamentally, we are having the same debate. The same debate about growth.

But whereas last year, we said quiet clearly and plainly that the only meaningful housing affordability measure was to increase supply…

…the public debate,

…the political debate,

…has jumped to an admittedly logical conclusion that an alternative policy is to not have so many people to house, feed, move and keep safe.

The same policy problem. Two very different solutions.

I know this is the wrong crowd to convince on the merits of curbing population growth.

You need consumers for your products and you need a workforce to build them. I know there are serious concerns in the business community about what slowing migration means for you.

But the reason this debate is happening now, is because the public’s anxiety about over development…

…the impact on our cities,

…and strain on our infrastructure,

…is profound.

And their trust in civil society, and in business and political leadership to respond meaningfully, is at its lowest ebb.

I’ve been making this point, since I was Resources and Energy Minister, and I’ve seen this scenario play out in those industries.

When trust diminishes, when the public withdraws the social licence they give industries to operate, there are catastrophic consequences.

We’re seeing it now with the banking royal commission, and the disgust the public are feeling with every new revelation.

We don’t know what the long term impact of that will be but if past performance is an indicator, it will be problematic.

I say this to the development industry at every opportunity – you haven’t lost your social licence…

…. yet.

But community anxiety about inappropriate development, about profiteering and past allegations of corrupt conduct and lobbying, could result in the social contract between your industry and the public being broken.

The consequences of that for all of you, would  quite frankly,  be apocalyptic.

We are barely keeping pace with population growth as it is.

We cannot afford a downturn in supply.

We cannot afford to not grow. We cannot afford to not build. You can’t.

The State can’t.

Our children can’t.

But it is impossible, utterly impossible, to build the apartments and houses of tomorrow if the public simply do not want them in their communities and towns.

That message – born largely from a fear of change – is being delivered to this government on a daily basis – and the construction industry so far has been extraordinarily slow to react.

So I say to everyone, it is our collective responsibility to create that trust with the public.

And a lot of that responsibility does fall to you, the residential building industry.

You are partners with the development sector. One can’t live without the other.

If one lets the other down, there are problems for both.

We need to start saying to our partners, to our stakeholders, at every opportunity – how are we convincing the public of the merits of these proposals?

Because can I say, it frustrates me immensely, when stakeholders and organisations are paying millions

–millions of dollars collectively, to lobby myself, lobby my MPs, lobby councillors, lobby public servants, to get projects across the line –with no answer to the question of whether or not the public supports them.

Before you knock on my door, I want you to knock on the doors of people in the neighbourhoods where you’re building.

It’s one thing to convince a planning official or a councillor of the merit of a proposal.
But if you haven’t convinced the family of four who have to look at what you’re building every day when they walk outside to pick up the paper and feed the dog, all the money in the world, all the glossy presentations, all the slickest lobbyists won’t save you.

*You must first convince them of the merit of your proposals – increasingly they are becoming better organised, their voices are rightly getting louder and, importantly, across the political spectrum they are being heard.

*And unfortunately it is the voices of those that oppose that are being listened to the most…..those who are already established in our communities

……….not the young workers……….not the first home buyers
……….not our sons and daughters

Before you lobby your local MP …..or me…….think about gaining support of the local communities in which you plan to build….spend some time and effort there before you engage the lobbyist…it might be a worthwhile investment

I go back to that point about trust.

We in our sector, in the business of planning and housing, have a unique opportunity to build that trust now, and with it, build the cities and towns of tomorrow.

Which excites me a great deal.

Because I’m constantly staggered at the incredible quality of homes and apartments being built in this city today.

(CAAN: Engineers Aust Reports 85% defective on completion)

And that’s a credit to all of you. To our architects and planners.
The designs, the build quality, the construction techniques, every ounce of effort, going into building the homes for tomorrow’s Sydney is world class.

What I see from angry communities is a cooling, a thaw if you will, in the hot tempers of activists the second the ribbon gets cut on new projects.

Because there is a profound disconnect in the public mind, between what they think new buildings will look like and the impact they will have, versus the reality.

I frequently use the example of Central Park in Sydney’s Broadway. A controversial project. There were protests in the street when the old brewery site was proposed to be knocked down.

It is now a multi award winning work of public art. It is an incredible addition to our beautiful city.

It is such a good looking building, it even manages to make the brutalist nightmare of the UTS site look attractive just by standing next to it!

So it is possible to convince the public of the merits of major development.

If the wealthy activists could change their mind after seeing Central Park completed, I have no doubt we can do the same to the people of Sydney, even in my own electorate of Lane Cove.

Can I say clearly to you today, I stand by 100% all the supply side measures we initiated last year.

We took on perhaps the greatest social and economic challenge in this country today, the challenge of increasing the affordability and accessibility of housing without diminishing the value of houses that so many Australians have invested their entire future in.

I can read you a shopping list of achievements in planning from the last year, like the reforms to the EP&A Act and Independent Hearing and Assessment Panels.

You know what we’ve done, you’ve given us feedback as well. We haven’t done everything you’d like either. I get that feedback loud and clear.

There’s going to be plenty of time in the next 128 days before the NSW Election to tell you about achievements. You’re going to get them in your letterbox and on your TV screens daily, let me assure you.

This is going to be one of the hardest state election campaigns in recent memory.

But we stand by our record, and I think our record speaks for itself.

The NSW Liberals & Nationals will still be in office next year, of that I can assure you.

If the Commonwealth responds meaningfully to population growth, and with NSW having a seat at that table, we can take some of the pressure off our infrastructure.

I think if the public sees meaningful action on population growth, it will ease some of the anxiety about inappropriate  development and give your industry, and my portfolio, the breathing space it needs to get much needed supply into some crucial parts of our city as new infrastructure comes online.

I know you have concerns about a cut in migration targets, just as you have concerns about taxes like stamp duty and infrastructure contributions.

But something has to give. We are locked in an unsustainable cycle right now.
I don’t think this gets reported enough about population growth, but it’s very important.

In the matrix of factors we tabulate to arrive at our forward population projections, one is actually in deficit.

Forward population is the sum of our birth rate, minus our death rate, plus overseas migration, plus interstate migration.

But the column for interstate migration, is a minus. More people leave NSW for interstate, than arrive.

A big factor there is affordability. Infrastructure. Liveability.

I think it’s important for business to temper their panic about cutting migration with the fact that once strain on infrastructure decreases, the number of people leaving for other States will decline.

We’re not going to wake up one morning and find the trains and roads empty like in a zombie movie.

What will wake up to, is less playing catch up on infrastructure and better planning on where growth can be accommodated.

We are doing so much great work on this right now but there’s more to do.

We have a new regional plan for Sydney and 5 district plans already finalised by the Greater Sydney Commission.

New land release areas announced in South East Wilton and South Creek West.

We’ve approved plans for the regions because for all this talk about population, our regional towns are shrinking. And we’re fighting to address that and use regional migration to take the pressure off our cities.

There are a lot of major issues facing your industry that State Government simply has no control over.

One of those is accessibility to credit, it’s a problem for home buyers it’s a problem for you as well.

I think the majority view, is that our supply side measures last year, coupled with macro economic measures implemented by the Commonwealth, had a real impact on affordability and are at least in part responsible for lowering house prices.

But they won’t amount to much if home buyers can’t access credit.

A one bedroom apartment at 40 square metres for $400,000 is completely out of reach to a first home buyer if the banks will not lend at all to anything below 50.

That last point is a particular concern to me as I think we were on the right path last year with changes to SEPP 65 around minimum lot sizes.

I continue to be passionate about making sure there is diversity in housing stock.

I know a lot of you were very great supporters of my Medium Density Housing Code changes. I am a great supporter of my Medium Density Housing Code Changes too!

But it goes back to that point I made up front about bringing the public with us.

Now there was a lot of politics involved with the Medium Density Code.

And I think, I predict, that after this next election, when certain councils, councillors and mayor start putting their attention back on their own communities and less on their own political ambitions for higher office –

(CAAN: RYDE Mayor and others are standing up for Constituents Rights!  At the request of their LGAs)

We might see some warming up to the idea when there’s no margin in putting out glossy pamphlets criticising it.

That’s just a prediction.

I think that’s something we have to revisit aggressively next year.

Medium density unlocks so much potential. It unlocks suburbs that were previously out of reach to first home buyers, in unlocks the wealth generating potential in land already owned.

It also enables diversity in housing – providing young people with access to the types of homes they need in their early stages of life in the areas they want to live – and also allowing older people – so called “empty nesters” – to stay in their communities.

(CAAN:  B.S.)

It can and will be transformative, but I’m the first to admit we have a lot more work to do convincing councils and the broader community.

Finally, I want to turn to infrastructure contributions.

I want to work with you on infrastructure levies. I came to this job and I wasn’t happy about them either.

I take you right back to my point about the planning system – an ancient edifice with parts glued on as required.

It works, but it also gets clumsy. And I think years of tinkering with infrastructure contributions has made our system very clumsy.

I absolutely stand by our State Infrastructure Contributions. Because I know the State Government is capable of efficiently distributing those funds where they’re needed.

I’m out every day of the week at the moment either announcing or cutting the ribbon on another project bank rolled by those contributions. I can see they’re working, I think the community can see they’re working.

In fact, in my view, they are a vital part of ensuring community support for development….they are an important tool in addressing community concerns around development.

With regard to section 94s, I appreciate your concerns.

But I think it would be helpful going forward if you started seeing State Government as an arbiter between yourselves and council on reform in that space, and not another bad guy.

And let me make this absolutely clear – I want to reform infrastructure contributions.

It’s been my long ambition, since coming to this job, to create a system that sees you cutting just a single check for all the required infrastructure supporting your projects up front, in a transparent way.

That’s going to be a priority next year. An absolute priority.

And it’s going to mean some frank and fearless discussions with councils that I will need your support on.

But any discussion on contributions has to be predicated on this basis – they are absolutely vital.

I take you right back to that point about public trust.

There will be no sympathy for any industry trying to dodge their civic responsibility to pay for public infrastructure that supports their profit making enterprises.

And I actually see your industry responding to that challenge. I’ve never spoken to a developer or builder who didn’t want to contribute in a meaningful way.

I think the principal problem we have to address is ensuring you know up front what you’re paying for, how much, and why we need it.

And that’s something that’s going to take a lot of work to get right and I look forward to going on that journey with you in the new year.

Can I say in conclusion, with so many analysts predicting a rocky path ahead as the market cools, I appreciate there is much anxiety.

But can I say, the best thing about market cycles is they’re cycles, and we’ve been through downturns before and Government has responded.

One response from the past was the creation of Landcom, to unlock more land at lower prices and get projects moving when times were tough.

I think one of our most important reforms in the last two years was getting Landcom back as its own operation, with it’s own specific mission, away from the broader infrastructure delivery of platform of Urban Growth.

Can I just congratulate John Brogden for all the work he’s doing there and say to you all, we are in safe hands, Landcom represents such an important safety net for the market I think whatever happens in the coming years, you’ll see NSW continue to outperform other jurisdictions because we are pre prepared with a Government response to whatever market failures may or may not occur in a constrained economic environment.

Thank you all.